EU guidelines set out two-phase Brexit talks

Member states are now going through the text to finalise their positions. The guidelines will then be adopted at a summit of EU leaders on 29 April.

Priorities

The EU will want to create certainty for the EU citizens caught up in Brexit - either EU nationals living in the UK, or Britons living in the EU.

The issue is very complex: negotiators will first need to identify who these people are, who is living in the UK now, as well as who has lived there before and might return. What about relatives - what should happen to their right to work, and their access to benefits and health care?

The EU wants "reciprocal, non-discriminatory" rules that are “enforceable” on both sides. This means that some sort of mechanism, or court, will have to oversee these rights. In the EU it is the European Court of Justice (ECJ), but there is still questions about what type of procedure will suit the UK.

The second issue is to settle the financial bill, for the UK to honour its previous obligations and commitments.

“It is not a punishment or discouragement to others,” a senior EU official said. Previous commitments have to be met to create certainty for authorities, businesses, universities, and many others.

The Republic of Ireland remains a key issue for the EU, as it wants to preserve the peace settlement in Northern Ireland, and to avoid hard borders.

But an EU official confirmed that "it will be an external border of the EU, so in a legal sense there will be a new quality [to] the border,” indicating that there will need to be changes to the current arrangement.

He added the EU’s commitment is to be "flexible and imaginative” about figuring out a way of doing that without undermining the single market, or the EU's legal order.

Phases

The EU’s draft guidelines state that the first phase of the negotiations should aim to agree on a divorce settlement on the rights and obligations of the UK.

It would have the goal of providing "as much clarity and legal certainty as possible to citizens, businesses, stakeholders and international partners” on the future.

An agreement on these points does not have to be achieved for the EU and the UK to start talking about the future in a next phase, but “sufficient progress” is necessary.

It is a political assessment, and it is for the EU leaders to decide when that sufficient progress has been achieved, based on the recommendations of the EU's chief negotiator, Michel Barnier.

A senior EU official said that the bloc wants to move onto the first phase as quickly as possible, and it could be negotiated by autumn.

If that political criteria is met, the EU would be open to talk about a future framework.

However, the details of a future relationship and trade deal can only be discussed once the UK is out. "The future relationship as such can only happen when the UK becomes a third country," said a senior EU official.

However, any future trade deal cannot amount to being a member of the single market, the EU warns.

"It must ensure a level playing field in terms of competition and state aid, and must encompass safeguards against unfair competitive advantages through, inter alia, fiscal, social and environmental dumping,” the draft guidelines state.

Transitional period

That future agreement will need to be ratified by national parliaments, which could take up to two years.

Therefore, the guidelines foresee a transitional phase to “bridge” the time between the divorce settlement and when the UK leaves the bloc in 2019, and a future trade deal, which can only be negotiated in detail when the UK is already out.

"Any such transitional arrangements must be clearly defined, limited in time, and subject to effective enforcement mechanisms,” say the guidelines, again providing for the possibility that the ECJ will still play a future role in the UK.

While the UK is still an EU member, it is not allowed to enter into official trade talks with third countries, as that is the exclusive authority of the European Commission. However, it would be allowed to engage in preparatory talks.

“We understand the UK has a need to talk to other countries, but is should not happen in a way that [works] against EU interests,” a senior EU official said.

'Dispute settlement'

The withdrawal settlement under Article 50 "should include appropriate dispute settlement mechanisms”, the draft guidelines say, meaning that some sort of court jurisdiction will have to be maintained.

Any Article 50 agreement will legally be an EU agreement, which doesn’t have to be ratified by the national parliaments, but would fall under ECJ jurisdiction if it were to be contested.

Creating certainty

"Brexit will have consequences, things will change,” warned a senior EU official.

“There will be some level of destruction, barriers, not because of Brussels bureaucrats but because of the UK's decision,” he added, reiterating European Council president Donald Tusk’s sentiments that the Brexit talks will amount to “damage control”.

The draft guidelines will be further discussed on 11 and 24 April at the meetings of EU affairs advisers, who give counsel to the leaders.

The EU affairs ministers will also comb through the text on 27 April, in preparation for the 29 April summit.